I would accept that the fiscal framework protects the Scottish budget from UK-wide economic shocks, but managing any differential impact is the responsibility of the Scottish Government. That is the principle that underpins the Smith commission, and it works—it incentivises the Scottish Government to grow the economy while protecting the budget.
Here, it is important to remember the context for the discussion about borrowing powers. As a result of budgetary decisions that it took before the pandemic, the Scottish Government requires to find some very significant funds to plug the £1 billion black hole in our finances that is a result of tax reconciliations.
I do not want to spend more time going through the borrowing powers that the Scottish Government has in resource borrowing, capital expenditure and the Scotland reserve. The problem is that the Scottish Government already substantially committed that borrowing even before the virus struck.
For the first time, the Scottish Government has used its resource borrowing powers this year. Since 2015, the Scottish National Party Government has borrowed £2.5 billion in capital funds. The sum left in the Scotland reserve is £165 million, which is a relatively small sum. Having virtually maxed out the credit card with little left in the kitty, is it any wonder that there is cynicism when more credit is being sought?
It is not just the Conservative Party that is cynical. Professor Gallagher said to the Finance and Constitution Committee that the issue was a “red herring”. He was also clear that the UK Government’s ability to borrow, even at negative interest rates, was a formidable weapon in the fiscal armoury. That is not something that would be available to the Scottish Government.
I will draw my comments to a close—